the "4% solution" lay out a plan to return to a 4% economic growth rate which they argue is necessary. president george w. bush makes opening remarks. it's about 45 minutes. [applause] thank you all for coming. so when we have an event like this a year from now, as nice as the operation is, i think we'll be in a place you'll really like on the smu campus. thank you for your hospitality. it's a -- it's a pretty god interim step. i want to thank as well jernld turner of smu. president one of the finest universities in the united states. we at the bush center -- are

here with the their spouses we're fortunate to be associated with smu. our relationship with smu competed our expectations. i hope we have exceeded your expectations. we're very much involved in action oriented programs. i didn't want to be known as a think tanker. i want to be known as an a,-oriented place that can make a difference in the world. and so i want to thank you very much for having faith in us when we first convince you to support the bush center on the smu campus. we just got back from africa which is. we went over there because at the bush center, one of the major initiatives is to honor human life. we believe all life is precious. whether they live in america on the continent of africa. we are disturbed by the fact

that many women who have got the hiv virus, are getting cervical cancer not much is being done with it with your help we put together a collaborative effort to save lives. part of the mission was to kick off the red ribbon in bots wanna as well as to follow up in zambia where we kick it off in december. we wanted to go and refurbish a clinic. it didn't what your status in life is, you never too proud to handled a paint brush. and i had more paint on me than the wall. we wept over to a clinic, and i wish you could have seen the faces of the ladies who showed up at the clinic to be screened for cervical cancer.

158 women have now been screened since we opened it up. 20% of whom had cancer lesions. most of whom were treated right there at the clinic. the reason i tell you the story is that the involved with the saving lives and you are as well. i hope it make your heart feels good. it makes a difference to people who you'll never know. but know that -- founding executive directer of the bush substitute the action-oriented place on the smu campus.

[laughter] and i as well as others decided we would assemble some of the finest minds in the country who share the sense of optimism we have. we are a private sector can grow at 4% if we put the right policy in place. my view is we'll never fix the deficit without the private sector. that the balance sheet therefore -- you shouldn't take my word for it. you should take the word of people who are experts on the economy. and here's is our product. and you're the first to see it. so we published a book, the 4% solution and jim is going to introduce many of the folks are the folks who are here and able the editor of the book and who works with us at the bush center will be conduct a panel.

if you welcome him who is the founding executive directer of the george w. bush substitute and lead us nobly in the first 18 months of existence and we're proud to have you here. thanks for coming. [applause] the panelist may come up. president bush talked to you about -- do so with the freedom collection we're showing dense and freedom advocate the way. we are freeing young minds with the education programs. we're held helping to build the free institution of civil society in the mid east with the

women's fellowships and soon we'll be helping fighters for freedom wounded warriors and other veterans and their family through our military service initiative. today as the president said is about economic freedom. which is the surest route to growth. as president bush wrote in the forward to the "4% solution." free market capitalism offers the most efficient and just way to order an economy. it allows individuals to decide the course of their own lives. and this book does not exist in a vacuum. it's parent of the 4% growth headed by -- a project began as a conference at smu in the spring of 2011, i know many of you were there. we hired top economist as fellow. we started a vigorous website. we held a second conference in tax policy in may in new york and we have an event scheduled in shept in chicago that will

feature the governor there. and like the project as whole, this book seeks to focus americans on growth as a solution to our economic problems as the way to advance opportunity and prosperity. we're currently growing at 2%. that's not enough. this book offers ways to get to 4%. and if we get to 4% unemployment will plummet, and so will the burden of debt. and we hope that this book will become the focus of the discussion about the economy during the election campaign and beyond. it's about growth and freedom. so today we're going have a short discussion up here among three of the contributors to the book. i want to introduce first my good friend and former colleague kevin hact director of economic policy study at the american enterprise substitute and formally a senior economist at the fed. he wrote a great chapter on the path to growth focus on spending

with, taxes. on the far end is jason. senior research fellow at george maison university. and former chief economist and deputy commissioner during president bush's term of the social security administration. with charles he wrote a chapter on how social security should be reformed to encourage growth. and finally, president bush said our own editorial directer who edited this book. i wanted to take the opportunity to thank contributors to the book who are here today. additional contributors who aren't on the panel today but are here today. of the dallas fed, raise your help. there they are. who wrote about immigration. michael -- i'm sorry richard of smu and michael cox of msu. hi. and as you can see smu is

important. maria is not here today, i don't believe. also wrote a chapter for the book. and smu is very, very important as president bush said to the bush center. is the bush substitute's first book. the first of many as you will see soon see. it's unusual in it was publied by a major publishers crown. and as a result, we'll get broad circulation. many of you here are supporters of the bush center we thank you for making this book possible. and in a real sense, this book is literally yours and you will get a copy of this book as you leave a signed copy by president bush and we'll also be taking some questions from the floor. i want to go to -- are you guys comfortable here? >> absolutely. >> i like you better sitting. >> okay. >> i do. >> okay. brendan, you did the impossible to is kind of wrangle, as we say in texas, 21 authors, many of

whom are -- but temper mental type. tell us a story about getting the people to write for us. >> sure. you know, give a speech at smu campus he noted in the book we have four noble authors in the book. i was in the add audience and said i better check on them. the first one i reach out to is robert lucas. really wanted in the book. he said, you know, i'm busy. i'm not 100% sure i can do this. i said, all right. i better get myself an insurance policy. so i approachedder have nonsmith, another nobel and i said, would you write a chapter for us and i pitched a chapter to him. he came back and said no. so i'm thinking to myself this

isn't promising. i might have to go back to the president and we got a little ahead of you sir. and he comes back to me and says, you know, there is a chapter i would like to write, not the one you mentioned. i have been studying the houses crisis. i've been looking at every recession since the great depression, and what i'm finding is housing let us in -- lead us in to every recession and out of every recession. it's a better indicater than business on the severity recession, as well as the recovery. and the two exceptions don't just -- [inaudible] his research was shortly after world war ii, when it was a mild recession. and the other was in 2001. i had said that's interesting. and he goes a little further and says, you know, the exception of 2001 actually helped us 2008 a little bit because housing

didn't decline, insure mountly as you expect in 2000. it powered through the recession. and what we saw later we became a bubble. and i said, wow, thats a good chapter he came true with it. and, you know, i thought it was a great edition to the book. after it comes rolling in, robert lucas comes back and said here's my chapter. so i said, this work out pretty well. now go back to the president and say, well why in fact we didn't have four. we have five. >> yes. i think that book is unusual it has five no biel prize winners. that doesn't include kevin who is a future nobel prize winner. [laughter] as , by the way, i want to thank kevin and jason for coming down from washington for the event. so kevin, big question. is it possible to get the 4% growth? >> yeah.

absolutely possible. and i think that if -- we wouldn't let you name the book that afterall. you know, but before go that. i'd like to again thank harlan and jim an acknowledge the president for the vision. you might not be able to tell, i'm not from texas. i'm from washington, d.c. that's like the big difference between me and president bush. if you want to mess with washington, d.c. go ahead. that's what we find. but i've been living in washington, d.c., for a long time and watching policy debates going on. i have never seen a president that was as down secretly as president bush is. stwart a little ante-dote that i think the 4% solution was visible back then. but in the early years of president bush's administration he called a bunch of nobel prize winning economist to meet. it was the first time ever seeing him. i think it was the roosevelt room, it might have. and i was nervous. i wondered what the heck am i

doing amongst the great economist and i wondered what president bush was like. and then right as the beginning of the meeting he started asking the nobel prize -- he played the rancher and texan down here. in washington he was a policy guy. that's why the bush sphiewt has been pounded. he had a curiosity about economic policy that governed hiss life. in terms of % growth whether it's possible. yeah. it's possible. we have to stop doing the wrong thing. there are three things in the chapter that can turn the country around. the first is to get tax policy right. it's simple to get tax policy right. we're not doing it right now. we're the highest corporate tax country in the developed world. we're the third highest on earth. there are two countries less friendly for businesses.

after those two, you know, we're the least friendly place. and i summerrize the in the chapter if we fixer the stupid things we are doing you can add a percentage or two. .. >> what we need is spending reform that pares back government because that's harming growth.

and the literature that i cite in my chapter shows contrary to what keynes said, if you're in a situation where you've got unsustainably high government spending, if you pare it back, you can get a lot of growth sometimes relatively quickly, and i think there is another half a percent to a percent if we could have fiscal consolidation. sadly, there are a lot of countries trout the course of -- throughout the course of history that have been as messed up as we are, and we've seen them do this. and the third thing we need to do is to stop having everything expire in december, right? we've got this thing coming, right? imagine if you're a business person, and i know there are a lot of business people in the room, and you have got to decide what you should do next year. you don't know what the rules are going to be, right? and if you could just fix those rules and fix them kind of permanently so that people could look at them and say, oh, that's what the rules are going to be, we know that would unleash a lot

of pent-up activity. steve davis just published a paper that i talk about in my chapter that shows last year by his estimate economic uncertainty was the highest it had ever been in the u.s. he came up with a very clever measure that used technical google things to measure uncertainty, and last year was the highest it'd ever been, and last year gdp growth was a percent and a half lower because of the high uncertainty about all the things going on with the fiscal cliff and debt limit and so on. so that's a percent and a and a half. so we got a percent out of taxes, we get half a percent to a percent out of fiscal consolidation and a percent out of uncertainty. that gets you way above four. if you do it all at once, you won't get the high-end number from fixing all those things, but i, as president bush is, am very optimistic if we just get a ahead of the curve of these problems, we can have the country we remember once again. thank you. >> thank you, kevin. i want to turn to jason.

he wrote a fabulous chapter. we all know that in a financial sense social security and medicare are if trouble, but -- are in trouble, but what we asked jason and his co-author to do was how do you reform the social security system so that we get growth? it's not just fixing it in terms of making it balanced, but what do you do to get growth? what's the answer to that question? >> and i have two hours to give you an answer, correct? [laughter] >> more like two minutes. >> first of all, i want to echo kevin's comments and thank the bush institute and all those associated with the project. and, mr. president, thank you -- >> jason, why don't you sit here, because we're getting -- >> getting feedback? >> yeah. >> this better? again, thank you, mr. president, for your remarks. and also, i apologize that i didn't get the no tie memo today. [laughter] that's all right, i look the fanciest up here. >> you can take it off. >> once it's on, it doesn't come

off. one of the things when i was deputy commissioner at social security that was a passion of mine was retirement security, and retirement security literally means for some, those who are young going to be old and those who are old today, and a lot of times people get social security, and they realize, they think that's their savings plan. and that is, actually, a false assumption. one, the money going into the trust funds is being used for government spending, it's not being used for productive capital purposes, so it gives this false impression we can use it for growth. and people think they have an account with their name on it and they own that account, and that's not true. one of the initiatives president bush tried to put forward is private accounts, and i think we need to discuss that because we're looking at a very low savings rate. some reports came out yesterday about consumption has gone down a little bit, and the savings rate ticked up to the mid threes? that's still horrible. we are borrowing too much money, and the social security system has perverse incentives that,

unfortunately, discourage work. and you're never going to grow the economy 2% a year, 3% a year, not even 4% a year if we do thing things that discouragek in our economy. we penalize people by continuing to tax them past 62, negative return on their investment if you think about the social security system. we have a system right now that, basically, penalizes second earner couples on the social security system. so we need to figure out wayses, and one of the things we wrote about in the book is how to change those incentives so they at least are work neutral and then also to encourage work. right now we are discouraging work, and that's holding this economy back from growing. one of the things we could do is raise the retirement age. we could change the tax structures that people who start working when they're past 62, they don't pay payroll taxes into the system. we don't tax them. we have the retirement earnings test. when people want to work, we're reflecting benefits past 62, we

tax them. why would you want to collect working tax benefits if you're going to get taxed on them? so people don't work. another thing we looked at was fertility. i'm not looking for a child tax credit break, but one of the things we see with countries is those who don't produce enough children end up stagnating and die. and if we go back to a steady growth rate of fertility, we actually wouldn't have a social security trust fund problem right now. we'd actually be balanced. one of the things we're talking about is not fully developed, but how do we change the tax system on the payroll tax side to maybe incentivize a tax system for those who have dependent children under 18. they would still pay the same lifetime sort of tax benefit and burden over time that they're paying today, but to make that burden smaller actually trying to raise children. so it's a pro-family, pro-social security, pro-work reform. and these are all things we have to consider going forward. and the last thing is to looking, again, at private accounts. in some ways we need to return to this idea that people need to

save and put that money to capital use. that's good for the economy to grow. without personal savings and personal responsibility for savings, we're not going to hit 4% growth. so we need to look at how we would actually do that today. >> thank you. >> go ahead. >> so let me just open the floor up to questions. you got a great opportunity, we've got a bunch of brainy people up here. not only are they brainy, but they generally do a good job of explaining stuff, so -- yes, sir. yeah, wait for the microphone. >> dr. john deally, and i love action. >> i'm sorry? we can't hear. it's a little bit too close, i think. >> this better? >> yeah. >> okay. dr. john deeley, and i love action. >> where good. >> i'd like to ask each one of our panelists, what is one thing that the people here tonight can do before we go to bed tomorrow night to move us towards president bush's dreams which are talked about in this book?

>> okay. so if you didn't hear the question, it is, what is the one thing that people here in this room can do before they go to bed tonight to advance us toward president bush's dream, our dream of 4% growth. >> can i start with that? >> yes, sir. >> i don't mean this to be glib. buy two copies of the book. keep one and give one to your neighbor. [laughter] [applause] >> there you go. >> again, i don't mean to be glib, but one of the things we are not having in this country is a concerted real dialogue about the problems we have. we need to have a discussion. you're not getting out of washington. the media not helping. we need to actually share information that is real, trusted and honest so we can start having those kitchen table conversations again. only by actually getting real numbers out in the discussion can we start influencing the debate. that's one small step you could do to start the process. >> that's fabulous, and i love

that, but i want to ask for an amendment also because 90% of the books that are bought are never read. so can you give us a three-page e-mail that we can send to our friends -- [laughter] that gives a summary of the book? now, i understand it won't do the whole job -- >> we have it. >> okay, great. >> okay. let me just ask all of you, because i know we're having some mic problems, can people in the back hear when jason talks? you can? all right. not very well? here's what i'm going to do, i'm going to bring everybody up here, we're going to get really cozy. [laughter] oh, you -- maybe it's his microphone. >> is it my mic? >> too low. >> kevin? >> well, you know, i think that the read the book point is correct, but the reason why the book is so effective is that the stuff makes sense. so you just listen to jason, when you read the chapters, just as we're talking about dealing with economists, you know, we

put a lot of work in to force people to be understandable. it's a lot of work. but what happens is when you go through the chapters, you start to understand why we're in the mess we're in and what we need to do to fix it, and it makes perfect sense. and, you know, part of it was what jason was saying. one of the things i learned through this project is this, if i don't eat something or don't buy a new car this year, then next year, you know, put money in the bank, then next year i've got some money in the bank. if i'm careful about what i consume in a few years, i've got lots of money in the bank, and if i start using that interest to finance my consumption, i have a higher level of consumption than i would have if i'd been consuming all along. a few years down the road then i have the wherewithal to buy more stuff. the same is true for the united states of america, and we've not been doing that. we've not been doing that at all. we've been borrowing and spreading the wealth around, and we haven't accumulated the

assets we need to feed future consumption and create growth. so what we need to do, and this is something that was evident in president bush's speeches early in the 2000s. we need to create an environment that's friendly to business, friendly to capital so that businesses and capital come here, and then we'll have more businesses, more capital in the future, and then we can grow our consumption, and we can grow our well being, we can have 4% growth. but the reason why you need to read the book is that it makes sense, and i think we all need to become advocates for doing the sensible thing because that's the last thing that the people in washington are talking about right now. [laughter] >> and i think that there are, there are four chapters in the book that kind of sum it up. president bush's forward, my introduction, brendan's chapter on why growth and kevin's chapter, chapter six, which presents three or four -- as he just outlined -- quick ways to growth. so maybe that's the best answer to your question. other questions? >> actually, could i just follow on that for one second? >> yeah, sure.

one of the goals we have is to change the conversation to growth. growth really matters, okay? if you're growing, all right? if the economy's growing, people are prosperous be, it makes solving these other problems a lot ceezier to do. -- easier to do. you asked what we could do. i think we have to absorb the fact that growth matters, and if you start thinking about growing versus just cutting or just austerity, i think us austeritys important, it helps us gate towards growth. but we have to grow the economy. >> so there are other questions? do i see another question? yes, sir. >> [inaudible] >> okay. >> if, god forbid, we get obama for four more years -- [laughter] what would you suggest we promote this opposition policy regarding growth?

>> president bush is, has been really admirably nonpartisan, and i think that he's focusing -- >> [inaudible] >> i agree, and i should say he focuses very much on substance. and the one thing i can say is that if you focus enough on substance, then you can convince anybody because the arguments are so sensible. and i think our objective as policymakers and as think tankers and do tankers, whatever we're going to call ourselves, so to make convincing arguments. because there have been times when convincing arguments have won regardless of who's in the white house. and i think the fact is that unemployment is so high right now that, you know, we're really desperate for good ideas. and i've got to say that if you look at "the new york times," they gave this book kind of rave review. now, i know "the new york times" is famous for being in the tank for president bush -- [laughter] but, but i think that they probably did that because they recognized the gravity of our current circumstances, and they as well as we are hungry for

ideas that'll wo because we've seen things that don't. and i can't imagine a patriot not having that at constitute regardless of who -- attitude regardless of who wins in november. >> [inaudible] >> yes, sir. >> if obama is reelected, what are your percentage chances that the will eventually end up like greece? >> well, look, if i could just answer that. i'm an optimist on america. i believe in america. i'd buy it if, you know, if america was a publicly-traded company, i'd buy the stock every day. this country and this economy is tremendously resilient, and one of the great things, i think, about our book is it's got ideas that, you know, require ideas in washington. it's also got ideas that require action on the state level, an individual level and on a business and corporate level. so, you know, what are the odds? i would, you know, i'm an optimist. i would say we will, we will get back to -- [inaudible] >> [inaudible]

>> the oecd, which is an organization that studies large developed nations, just did a big study to identify how big the policy challenges facing the nations around the world. and they estimated something called the fiscal adjustment, and the fiscal adjustment for greece that they need, which is either the immediate tax increase or the immediate reduction in spending necessary to make it so that their economy doesn't just explode is about 3% of gdp. so they would have to, you know, which is a pretty big adjustment. they'd have to either increase their taxes by 3% of gdp right now to fix their problem or cut spending by that. the oecd estimate for the united states is that we would have to have a fiscal adjustment of 8%. our policies are far worse than greece. if somebody says, you know, i think that we're kind of like greece, my answer is, in my dreams, okay? [laughter] because our situation is actually far worse. we've promised much bigger benefits than we can afford, and

we don't have a plan to pay for them. and we're going to have to make big changes, and i don't know if we're going to make the big changes in the year or if we're going to have a crisis like greece is having, but there's a big benefit to getting out ahead of it, and that's sort of the optimist answer. because we're in worse shape than greece, we need an 8% fiscal adjustment to fix things, then the policy option is unprecedented. >> [inaudible] [laughter] >> well, i can understand that from kevin because he's an economist. [laughter] yes. yes. kent. oh, okay. we're going to get, get the doctor a microphone, and in the meantime, is there another microphone anywhere? we'll just wait. >> thank you very much. can you hear me? >> yes. >> do you -- since we're action oriented, do you have, any of you, concrete ideas that can resolve the problem between the

dilemma that on the one hand if you cut the taxes, you're really cutting jobs -- i'm sorry, if you -- >> better. >> yeah. if you cut the taxes, you're cutting -- i'm saying it wrong. >> you cut the spending -- >> pardon? >> you're saying cut the spending? >> you cut the spending, that's right. you cut the spending, it means you're cutting jobs. if you keep on spending, it means you've got the problem and, ultimately, we go bankrupt. so we need something concrete to say about that rather than, you know, we need to grow or things like that. >> okay. good question. i'll just repeat the doctor's question. he said how do you resolve the paradox or the conflict between people who say that if you cut spending, if you cut government spending, you're going to cut jobs, but if you don't cut government spending, you're going to increase deficits and debt? now i hate to have kevin dominate this, but kevin's chapter actually goes into this in, i think, a very interesting

way. so you want to answer the question and then jason? >> yeah, sure. there are two answers. one is cutting spending isn't always bad for the economy if you're eliminating government jobs. it's not necessarily bad. for example, does anyone know that in the last three years the federal government in the u.s. has added 35,000 regulators? they've hired 35,000 new regulators, more than they had when president obama took office. i'm not -- i don't think those regulators are necessarily good for the economy on net. so there's that. but the real answer is just that you have to change the long-term growth of entitlements. that's the big problem. and, you know, jason's got a great chapter on how to do that. and if you do that, then you're not necessarily causing a big, radical reduction in government spending this year. what you're doing is you're making it so ten years from now it's way, way lower than we currently expect, but we know we can pay for it. so you're introducing certainty, and you're reducing, say, future benefits in a way people can see. now, the point is just this, this old joke, actually, jason,

something like kids today,more of them believe in extraterrestrials than believe they'll get their social security. [laughter] so if we change their benefits, then they don't actually think that they're worse off, right? so right now we're promising them a benefit they know they can't get. if we promise them a benefit they know they can get, you're not going to create the negative spending effect that the keynesians talk about. >> there's a great parable in the book, and i apologize, i can't remember which author wrote it, but it was about the u.s. engineer who went to china and saw them building a dam, and china's so interested in having jobs and job creation. and the u.s. engineer goes to china, and he sees them building a dam, and they're all using shovel els. and the engineer asks the chinese, why are you using shovels? why aren't you using modern equipment? we're trying to create jobs. then why don't you give them spoons? [laughter] all jobs are not the same. and i'm not saying that, you

know, we don't need government at all. there's, obviously, we're all government employment. but the idea that we somehow reduce spending or even if we reduce the growth of government spending does not mean we're going to see retardation in growth levels. those people who are doing government jobs will go to the private sector and actually do productive capital investment which would actually grow the economy. kevin said entitlement reform, we spent roughly $3.5 trillion last year, the federal government -- not even state and local -- 3.5 trillion. of that, about 1.5 was social security, medicare and medicaid. three big government expenditure programs are about 45% of goth expenditures. those are growing. in 2010 medicare and medicaid combined crossed social security and combined spent more than social security. social security's a $700 billion program. it's growing. health care, medicare, medicaid, it's growing. if we don't do something to rein those programs back in and change the incentive structures to get more pro-market growth-oriented policies this be

place, we are going to hit a fiscal cliff not at the end of year. we're not going to be able to afford our interest payments. we're lucky our interest rates are so low. we're not the ugliest person at the beauty pageant, if you will. where are you going to put your money? people are putting it here. our interest rates are so low, we can borrow low. that's not going to last forever. we go back up to a long-term average of 6, 8%, we add a trillion dollars in debt service and cost to our interest in over ten years. the interest alone will swallow up half of our federal expenditures. we'll be paying china for their military. we can't allow that to happen. that's one of the reasons why we're so proud to do this book, is that we really are putting policies in place and gentlemen, regardless of who's president in january 2013, they're going to face the exact same problems we have today. somebody has to tackle it, and part of what this action-oriented institute's doing, this book is doing is putting those ideas out there so we can start having a discussion

about, one, the importance is real. we're here today, and here's how you get reform in place with pro-growth policies. we've talked about the idea of greece and their debt crisis, economic studies have looked back over history. about one new country's hit the tipping point on their debt to gdp ratio, and generally the idea's on gross debt. when you hit 90%, you start seeing a retardation in growth. you may not go negative, but you're definitely going to slow your growth. right now we're at 100% debt to gd, in the united states. our gnp is about 15 trillion, and it's climbing. we are now seeing a reduction in our growth potential because of our debt, and we wrote these chapters blind. we didn't see each other's chapters until they were done. there was a uniform sort of concept throughout most of the chapters that we need to get our debt in order and reduce the debt to reduce the deficit. we need to have more savings in this country that encourage investment, and we need to encourage labor participation and work.

that's a uniform theme throughout the book, and these policies need to be put in place regardless of with which president in january or we're all going to face difficult problems going toward. >> i'll take one more question. there was somebody here, yeah. >> i think you hit the nail on the head. we're spending roughly a trillion and a half more federally than we bring in. my question is, let's say by some miracle romney actually wins the election. will there be the political will to combination effectively reduce spending and raise taxes to the point we can effectively reduce that? and that's in light of historically low interest rates that, you know, at some point are going to go up, and china's going to realize their debt's no good. i'd be interested in each of the panelists' comment. >> quickly, is there the political will? >> i think the answer is, yes. what's good for the qoos is good for the gander. we have the highest corporate

tax rate in the oecd, 35%. president obama and governor mitt romney have both come out advocating for reduction of the corporate rate to something that starts with a 2. president obama says 28, mitt romney says 25. if lowering moderate tax rates is good because of the incentive effect, aren't they good for individuals? i think we start having that dialogue, because there's a commonality on the corporate rate, we might see something happen 2013 regardless of who's elected. that's a wedge to start the discussion on tax reform in general. and you mentioned the 1.5 trillion sort of deficit each year. for those new york times columnists who think that the stimulus bill we put forward wasn't big enough, $1.5 trillion of extra spending a year, isn't that stimulus right there? how has that worked for us? >> you know, in any discussion about economics, you quickly get to a chart, and can we didn't

treat you to any of the charts tonight, but i will mention one in answering this question. we had robert lucas do a chapter, and he had, you know, a very fascinating chart. he put on a line that says, you know, here's average gdp growth in the united states, and you can run this line back almost 100 years. it's about 3%. sometimes it's less, and sometimes it's more. after recession it's usually much more, so it can catch up to its average, around 3%. and he said, you know, something's very interesting. you look at the recession since 2008, and it has taken a step down, and then it started to grow as a lower trajectory. so we never had that catch-up growth, we never caught back up to where we should have been. not only that, we're on a lower trajectory. so over time we're going to get further and further from where we should and could be. and another one of our chapter authors looked at that and said, you know, this is not too dissimilar from where we were in

the 1970s. europe grew at our rate after world war ii, we were pretty much in line. then all of a sudden they took a significant step down and never caught back up, and they were on a lower growth trajectory, they had taken a step down and were on a lower trajectory. year after year after year, that gulf between us and europe got wider. it's now about 40%. that's a significant gap. we're looking at just to get back to lucas' chart, we're looking at the beginning of that for us, and we say if we don't get back to that growth, we could look at europe and say that's our future, right? and since we have that benefit to look at europe, look at greece, look at what's happening around the world, we can say, well, that's not the future we want. and nothing concentrates the mind like a crisis or like people being unemployed. 8% unemployment is a crisis in this country. and i think what you'll see in washington after the politics is

done in november is that there will be a consensus on getting back to growth and getting back to the policies that we know will put americans back to work. >> kevin? >> you have to understand that the way we got into this mess is sort of the second mess, not the first mess s that a number of policy people, including columnists in "the new york times" and advisers of the president who really wanted to try to fix the country said that what we need to do is take a chapter from keynes, and we need to borrow a lot of money and spend a lot of money, and if we do that, it'll be great. and there were those of us at the time who said that's not going to work, and the reason we said back then it's not going to work is that if you put in this year a big surge in government spending, even if that makes gdp go up this year, when you take it away, it goes down again. so if we're going to do the policies they recommend, we not only have to know it's bad this year, which we certainly knew, but that we could afford to lose

the 2% growth when we take the stimulus away. since that didn't seem plausible back at the time, what we argued back then, i could e-mail you testimonies, was that we need to pursue policies that are somewhat reminiscent of what we see in the 4% be growth chapter now. the fact is i was testifying in front of the senate budget committee, and we were talking about what steps there should be, and there wasn't a democratic senator in that hearing who was willing to defend the stimulus on the record. and i was being pretty combatant in my testimony, and nobody argued with me. and the point is that the economy is still terrible. i think 2% is actually optimistic for what we're doing right now, and everybody wants to do something to fix it, and that's a great opportunity for a president that's willing to try something new. >> thank you. and, um, i just wanted to emphasize that we've been talking a lot about fiscal policy here, about spending and taxing. and entitlement policy. but this book also gets deeply

into energy, into immigration, entrepreneurship and a lot of other areas where we think policies, if they change, can promote growth. so i thank you all for coming, thank you, mr. president, and, please, pick up your book on the way out. [applause] and read it. [applause] [inaudible conversations] >> every weekend booktv offers 48 hours of programming focused on nonfiction authors and books. watch it here on c-span2. [applause] >> america's been patient, americans have supported this president in good faith. but today the time has come to turn the page. today the time has come for us to put the disappointments of the last four years behind us. to put aside